WEST LAFAYETTE, Ind. – Farmers continue to worry about high input costs and those concerns showed up in the latest Purdue University-CME Group Ag Economy Barometer, which dropped three points in May.

The barometer fell from 121 in April to 119 last month.

The decline was “driven primarily by worsening views of current conditions on the farm,” explained Michael Langemeier, director of Purdue’s Center for Commercial Agriculture. “High input costs were once again the dominant concern in this month’s survey. In fact, more than half of producers identified input costs as their biggest concern overall, while nearly half said those costs are the primary factor limiting improvement in their farm’s financial performance.

“The decline in May was largely tied to weaker perceptions of current conditions. The Current Conditions Index fell eight points (to 107) and now sits at its lowest level since December 2024.”

For the most recent barometer, 400 farmers were surveyed nationwide May 11-15. T

Short- and long-term producer sentiment toward farmland values increased in May – the short-term index rose nine points to 130 and the long-term index climbed five points to 160.

“Despite weakening sentiment and tighter margins, farmland value expectations actually improved in May,” said Langemeier, also a professor of agricultural economics. “Both the short-term and long-term farmland value indices moved higher this month. Producers identified interest rates, alternative investments and net farm income as the most important factors influencing land values.”

The barometer’s Future Expectations Index rose one point, while the Current Conditions Index dropped eight points. 

“Only 14 percent of producers said their operations (are) financially better off today than a year ago, and looking ahead to the next 12 months, just 22 percent of respondents expect their operations to improve financially.” Langemeier said in the June 2 Purdue Commercial AgBrief. “Caution is also showing up in investment behavior. The Farm Capital Investment Index declined to 41 in May, its lowest level since September 2024. This index measures producers’ willingness to make large investments such as machinery, equipment or buildings. A continued decline in this index signals increasing hesitation toward major capital purchases likely reflecting tighter margins, elevated borrowing costs and ongoing uncertainty surrounding profitability.”

About two-thirds of respondents think the conflict with Iran will negatively impact their net farm income this year – 13 percent expected a very negative impact and 52.8 percent, a negative impact. Twenty-one percent expect no impact, while 11 percent expect a positive impact and 2.3 percent, a very positive impact.

The barometer survey also asked producers about farm labor. About 39 percent of respondents hire non-family members to work on their farm operations, the summary said. Of those who hire labor, about 44 percent have had at least some or a lot of difficulty hiring this year, the summary noted.

Survey respondents were asked if artificial intelligence tools would improve their current labor and equipment situation. About 59 percent said it would not improve their situation, while 37 percent said it would help some and 4 percent said it would help a lot.

Overall, there “continued to be a large disparity in expectations between crop and livestock producers,” Langemeier and Joana Colussi, Purdue research assistant professor of agricultural economics, wrote in the summary. “Approximately 31 percent of respondents expected good times for crop producers, while 68 percent expected good times for livestock producers.

“Concerns about input costs reached a new high, and high input costs were identified as the most important factor limiting improvements in financial performance. A lower percentage (52 percent in May, 57 percent in April) of respondents indicated that U.S. policy is headed in the ‘right direction.’”